Entrepreneurship: An international phenomena Dr. Alan Carsrud Executive Director & Professor
Global Entrepreneurship Center
FLORIDA INTERNATIONAL UNIVERSITY Based on the research of Professors Carsrud, Mason, Harrison, Reynolds, Birch, Bygrave. Hay, Brown, Florio, and others
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Entrepreneurship: What is It? • Who or what is entrepreneurial? – – – –
People? Businesses? Industries? Entire societies?
• What makes “it” entrepreneurial? – – – – –
Special traits? New/innovative ideas, products, & services? High growth activities? Exploitation of opportunity and/or people? Creation of new markets, new economic sectors?
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Copyright © Florida International University, Miami, FL 33199
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What is Entrepreneurship? • • • • • • •
Not Just Small Companies Not Just Start-Ups Not the Unscrupulous Promoters Not Just For-Profit Firms Not Just Non-Government Certainly not many “dot.com’s” What is it to you as a student?
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If Entrepreneurship is the Answer, Then what are other questions? • • • • •
What it isn’t? Why is it important? What role does it play in society? What is its role internationally? How is being an entrepreneur different from being a manager?
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Entrepreneurship: Traditional Definitions • • • • • •
Risk Taker Founder Innovator Capitalist Scoundrel Born not Learned
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Views of Entrepreneurship • Francis A. Walker (1876) ...the new captains of industry as the principals agents of production and industrial process.
• Joseph Schumpter (1934) ...the entrepreneur is the man who gets new things done.
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Or a modified David Birch model • • • •
Cockroaches Mice Giselles Elephants
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Another View • Peter F. Drucker (1964) ...’maximization of opportunities’ is a meaningful, indeed a precise, definition of the entrepreneurial job. It implies that effectiveness rather than efficiency is essential in business. The pertinent question is not how to do things right but how to find the right things to do, and to concentrate resources and efforts on them.
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More Views of Entrepreneurship • William Baumol (1968) He is the individual who exercises what in the business literature is called ‘leadership’
• Albert Shapero (1975) ...a kind of behavior that includes: 1) initiative taking, 2) the organizing or reorganizing of social / economic mechanisms to turn resources and situations to practical account, 3) the acceptance of risk of failure. A major resource utilized by the entrepreneur is himself.
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Perhaps the Best Working Definition
“The pursuit of opportunity beyond the resources you currently control” Professor Howard Stevenson Harvard Business School
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About Entrepreneurs • • • •
Innovative Creative Excellence Egos
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The entrepreneur’s personality: • Cooperative, a team player; • Strong desire to work hard; • High in desire to learn new & different things; • Able to listen to others; • Not competitive; • Not any more risk prone than other professionals. Copyright © Florida International University, Miami, FL 33199
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Factors in entrepreneurial success: • • • • • • • • •
Achievement Oriented Personality Entrepreneurial Attitudes Belief in Self and Ability Social Context Precipitation Event Intention to Start a Venture Opportunity Recognition Controlling Resources Timing
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Why Entrepreneurship Now? • • • •
Technological Change Economic Change Social Change Psychological Change
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The Present Explosion • • • • • • •
Response to Ambiguity Need for Flexibility Creating Economic Value Key to Economic Development Matches Risks and Rewards Creation of Wealth Creation of Jobs
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A final set of questions: • Are there national differences in entrepreneurial activity? • Is entrepreneurial activity related to national economic growth? • Why are some countries more entrepreneurial than others? • What can be done to enhance entrepreneurial activity?
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The Global Entrepreneurship Monitoring (GEM) Project Based on the research of Professor Paul Reynolds and the National GEM Teams
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General National Framework Conditions
•Openness (External Trade) •Government (Extent,Role) •Financial Markets (Efficiency) •Technology, R&D (Level, Intensity) •Infrastructure (Physical) •Management (Skills) •Labor Markets (Flexible) •Institutions (Unbiased, Rule of Law)
Social, Cultural, Entrepreneurial Political Framework Context Conditions
•Financial •Government Policies •Government Programs •Education & Training •R&D Transfer •Commercial, Legal Infrastructure •Internal Market Openness •Access to Physical Infrastructure •Cultural, Social Norms
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Major Established Firms (Primary Economy)
Micro, Small, and Medium Firms (Secondary Economy) GEM CONCEPTUAL MODEL
National Economic Growth (GDP,Jobs)
Entrepreneurial Opportunities
Entrepreneurial Capacity - Skills - Motivation www.entrepreneurship.fiu.edu
Business Churning
Two Types of Entrepreneurs
• Necessity • Opportunistic
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0.0%
Copyright © Florida International University, Miami, FL 33199 www.entrepreneurship.fiu.edu CHINA
BRAZIL
ARGENTI
CHILE
S AFRIC
H KONG
HUNGARY
SLOVENI
POLAND
JAPAN
KOREA
INDIA
CROATIA
RUSSIA
GERMANY
SPAIN
MEXICO
ISRAEL
THAILAN
AUSTRAL
SWEDEN
C TAIPE
N ZEALA
IRELAND
SINGAPO
UK
CANADA
SWITZER
US
NETHERL
BELGIUM
ITALY
ICELAND
FINLAND
DENMARK
NORWAY
FRANCE
% Necessity
Necessity Entrepreneurship as % of Total : GEM 2002
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
Personal Responses and Entrepreneurial Acdtivity: 30 GEM 2002 Countries TEA_Opportunity
TEA_Necessity
TEA_Other
25.00
#/100 Persons 18-64 Yrs Old
20.00
15.00
10.00
5.00
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ilu re :N
o
es ar Fe
Fa ar Fe
Fa
ilu re :Y
Sk ill:
H
av e
SU
Sk ill: SU av e H
No
Ye s
o ni ty :N
es
O pp or tu
e
ni ty :Y
Se
Se
e
O pp or tu
En tr e :N o ow
Kn
Kn ow
En
tr e :Y es
0.00
Market Replication vs. Market Expansion • Market Replication – Customers know product or service well – Lots of competition – Using established technology or procedures
• Market Expansion, Creation – Customers unfamiliar with product or service – No competition – New technology or procedures
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TEA Entities - Replication versus Market Expansion by Global Type Asian Advanced
Former Centralized
EU Europe + 4
Former British
Latin American
Asian Developing
16
14
#/100 Adults 18-64 Years Old
12
10
8
6
4
2
0 Market Replication
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Some market Expansion
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Developed Asian [Chinese Taipei, Hong Kong, Japan, Singapore] • • • • •
Opportunity Entrepreneurship low Necessity entrepreneurship very Low Market expansion entrepreneurship low Women low in entrepreneurship relative to men Small percent adults – See business opportunities – Know an entrepreneur – Think they know how to start a business • Low income disparity
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Eastern European [Croatia, Hungary, Poland, Russia, Slovenia] • • • •
Opportunity entrepreneurship low Necessity entrepreneurship very low Market Expansion entrepreneurship very low Women low entrepreneurship rates relative to men Small percent adults – See business opportunities – Think they know how to start a business – Some know an entrepreneur
• Substantial farm sector • Moderate income disparity • Low VC, informal financing Copyright © Florida International University, Miami, FL 33199
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European Union + 4 [Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, Israel, Italy, Netherlands, Norway, Spain, Sweden, Switzerland, UK]
• • • • •
Opportunity entrepreneurship moderate Necessity entrepreneurship very low Market expansion entrepreneurship moderate Women low in entrepreneurship relative to men Many adults – – – –
See business opportunities Think they have start-up skill Know an entrepreneur Have high fear of failure
• Low income disparity • High social security costs • Moderate VC, informal financing Copyright © Florida International University, Miami, FL 33199
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Former British Empire (Anglo) [Australia, Canada, New Zealand, South Africa, United States]
• • • • •
Opportunity entrepreneurship high Necessity entrepreneurship low Market Expansion entrepreneurship high Women low in entrepreneurship relative to men Many adults – – – –
See business opportunities Think they have start-up skill Know an entrepreneur Have low fear of failure
• Moderate income disparity • Moderate VC, informal financing Copyright © Florida International University, Miami, FL 33199
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Latin America [Argentina, Brazil, Chile, Mexico] • • • • •
Opportunity entrepreneurship high Necessity entrepreneurship high Market Expansion entrepreneurship high Women approach men in entrepreneurship rates Many adults – See business opportunities – Think they have start-up skill – Know an entrepreneur
• • • • •
Substantial farm sector High % unemployed < 25 yrs old Highest income disparity Highest firm registration barriers Moderate VC, informal financing
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Developing Asian [China, India, Korea (South), Thailand] • • • • •
Opportunity entrepreneurship high Necessity entrepreneurship high Market Expansion entrepreneurship high Women approach equality in entrepreneurship rates Many adults – See business opportunities – Think they have start-up skill – Know an entrepreneur
• • • •
• •
Substantial farm sector High % unemployed < 25 yrs old High income disparity Political System – High levels of corruption – Weak property rights protection Highest firm registration barriers Moderate VC, informal financing
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How Many People Are Involved? • 37 GEM 2002 countries – – – –
3,882 million people 2,374 million in labor force age range (18-64 years old) 62% of world population 92% of world GDP
• Estimate 286 million active in start-ups – – – –
205 million in India and China 18 million in the US 11.6 million EU + 4 4.0 million Eastern European 5
• 140 million business entities (2 per start-up) • Estimate 460 million active in the world – Compare to 132 million new human births each year – More that population of North America (415 million)
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So Hopefully I have Answered • Who or what is entrepreneurial? – – – –
People Businesses Industries Entire societies
• What makes “it” entrepreneurial? – – – – –
Special traits New/innovative ideas, products, & services High growth activities Exploitation of opportunity and/or people Creation of new markets, new economic sectors
Copyright © Florida International University, Miami, FL 33199
www.entrepreneurship.fiu.edu
QUESTIONS?
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